An economically secure 2024
It is not uncommon to say “have a Prosperous New Year” when we greet friends and acquaintances at the start of the year. But what exactly do we mean by “prosperous”? Do we mean that we want the recipients of our greetings to be awash with cash (or its equivalent), more than they know how to spend?
More likely, we only mean that they should not want for anything, that they would be able to consistently meet their daily necessities — and perhaps have something extra for their reasonable wants with a little amount put away for emergencies. We could mean that they should not worry about whether they would continue to have an income in the foreseeable future, and that they are able to live the kind of life they envision for themselves.
This is the very definition of economic security.
It seems so basic, written down and spelled out, but unfortunately, this is an aspiration — not the actual situation — of millions of Filipinos. In the most recent Pulse Asia survey in December 2023, as commissioned by the Stratbase ADR Institute, economic issues remain the top-of-mind concern of Filipinos. Controlling inflation, cited by 72% of respondents, was at the top of the list. Other concerns include increasing the pay of workers (40%), creating more jobs (28%), reducing the poverty of many Filipinos (25%), and fighting graft and corruption in the government (19%).
That Filipinos should be concerned with the rising prices of goods is well-founded. To be sure, macroeconomic numbers are seeing marginal improvement. For example, headline inflation slowed to 4.1% versus 4.9% in October, driven by the lower year-on-year growth of the heavily weighted food and non-alcoholic beverages at 5.7%, followed by transport at 0.8%. This brings the national average inflation from January to November 2023 to 6.2%, making the 6% full-year target set by the Development Budget Coordination Committee (DBCC) likely. And then, data from the Philippine Statistics Authority (PSA) show that in October 2023, the unemployment rate eased to 4.2% from the 4.5% recorded in October 2022 and the 4.8% in July 2023.
Still, these are results from short-term, month-to-month data. The fact is that the cost of living remains a big concern in the long run, and 2.09 million persons remain unemployed. It is no surprise that consumer outlook in the Philippines for the fourth quarter of 2023 worsened and significantly became more negative at -19% from -9.6% in the third quarter, according to the Bangko Sentral ng Pilipinas (BSP).
This weaker confidence among consumers stemmed from their concerns about the following: 1.) faster increase in the prices of goods; 2.) lower income; 3.) fewer available jobs; and, 4.) the effectiveness of government policies and programs on inflation management, public transportation, and financial assistance to low-income households.
What must be done to improve the confidence of consumers and the general sentiment of Filipinos that things will be better for them in the future? Economic security, after all — and economic security alongside defense is an essential part of national security — goes beyond month-to-month improvements. Security, rather, is a long-term concern that affects the direction of the lives of families, and enables parents, for instance, to assure their children that their needs would be taken care of, and that they can actually contemplate a secure future ahead of them.
Going beyond individuals and families, the economic security of a nation hinges on structural reforms that make a difference years down the line. Achieving economic security means that our nation will be resilient and self-sustaining despite disruptions and other challenges that may arise from geopolitical and geoeconomic developments around the world, and will be able to achieve sustained, inclusive growth that would be felt by as many people in society as possible.
We know the challenges all too well, being a consumer-driven economy with a greater volume of imports than exports, resulting in a trade deficit. During the pandemic, when mobility restrictions disrupted the global supply chain, our economy suffered heavily with prices of goods increasing. Today we remain on edge as we anticipate further challenges in flashpoints and other areas, specifically China’s continued aggression and adventurism in the West Philippine Sea, and the conflict in Ukraine and in Gaza. We are also at the mercy of other developments like climate change and more erratic weather patterns, resulting in constant threats to our agricultural output.
A logical, strategic step, as Stratbase has been espousing and supporting for quite a time now, is to shift from consumer-driven to investment-led growth. Investments, in their essence, are all about the long term. They bring in infrastructure, jobs, income — all of which will be realized not today, not next month, but in the years and generations to come. Specifically, investments in the manufacturing sector will do much to make our economy resilient and less vulnerable to the complications of geopolitics. Imagine the jobs that such investments would generate, communities that would be empowered, and prosperity that would be attained.
Of course, a lot is demanded of our government to be able to effect this shift to investments, even though its initiatives thus far have been commendable. Investments come to countries where the regulatory environment is encouraging and conducive, where policies are fair, consistent, and evenly applied, where transactions and costs are transparent, and where officials are accountable.
We can take heart in the business sentiment as reported by the BSP: it remained upbeat in Q4 2023 as the overall CI stood at 35.9%, slightly higher than the 35.8% in Q3 2023. If the private sector can remain this optimistic about their prospects, then they must be given additional reasons for being upbeat about the Philippine economy.
With this, I wish our country and our people an economically secure new year and beyond.
Victor Andres “Dindo” C. Manhit is the president of the Stratbase ADR Institute.
